1 AN INTRODUCTION TO BUSINESS UNIT 1 PPT 2

2 Businesses Exist... To develop a good idea To develop a good idea To make a profit To make a profit For charitable reasons For charitable reasons To provide a public service To provide a public service

3 TO DEVELOP A GOOD IDEA Inventors create new products Inventors create new products An idea for a product/service that no-one else has brought to market An idea for a product/service that no-one else has brought to market

4 TO MAKE A PROFIT... By selling something at a price which is higher than it cost to provide By selling something at a price which is higher than it cost to provide Profit is the return on investment made by the owner or owners. If there is no profit, they may sell up and invest elsewhere Profit is the return on investment made by the owner or owners. If there is no profit, they may sell up and invest elsewhere

5 FOR CHARITABLE REASONS... Volunteers work to support and help others Volunteers work to support and help others Funds are raised in a number of ways - coffee mornings, concerts... Funds are raised in a number of ways - coffee mornings, concerts... Red Nose Day for Comic Relief Red Nose Day for Comic Relief Company Sponsorship Company Sponsorship Collection tins Collection tins Setting up “Charity Shop” to sell items Setting up “Charity Shop” to sell items Public Donations - wills, gifts etc Public Donations - wills, gifts etc

6 TO PROVIDE A PUBLIC SERVICE Services provided by the Government and paid for by our taxes Services provided by the Government and paid for by our taxes

7 Public Services include... National Health Service/hospitals National Health Service/hospitals Schools Schools Roads Roads Libraries Libraries Education Education Armed Services Armed Services Police/Fire Services Police/Fire Services

8 WHAT ARE THE AIMS OF BUSINESSES? Most profit-seeking businesses aim to achieve some of the following

9 BUSINESS AIMS Quality Product/Service Increase Market Share Survival Maximise Profit Growth Excellent Customer Service Environmentally Friendly New Branches Foreign Trade more customers, beating the competition

10 Not all businesses focus solely on making profits. Body Shop and The Co-op are examples of organisations which have much wider aims.

11 Improving conditions of: The workforce many firms provide a variety of “extras” or perks for their employees eg cheap food, social clubs/sports facilities, hairdressing and manicures, flexible hours cheap food, social clubs/sports facilities, hairdressing and manicures, flexible hours The suppliers especially those in Third World Countries who are often very badly paid People in the community many businesses set aside money to give to charities, especially local ones

12 Help more people Help more people Collect as much money as possible Collect as much money as possible Recruit more people to help Recruit more people to help Open more charity shops Open more charity shops A Charity might also have different aims...

13 Providing a quality service Providing a quality service Providing an efficient service - eg hospital appointments within a certain time Providing an efficient service - eg hospital appointments within a certain time Cutting costs Cutting costs Raising revenue - persuading the Government to allocate more funds Raising revenue - persuading the Government to allocate more funds Public Sector organisations might also have different aims...

14 Who has an interest in the business? Many people can have an interest in how a business is run and managed and how it performs...

15 These people are called… Stakeholders

16 Stakeholders of a large company Suppliers Employees Shareholders Directors/ Managers HM Revenue and Customs Customers

17 Stakeholders include … Owners owner/managers of small businesses owner/managers of small businesses shareholders of larger companies shareholders of larger companies will share in profits if business does well will share in profits if business does well

18 Directors/Managers If the business doesn’t do well, they could be out of a job! If the business doesn’t do well, they could be out of a job! If business does well could receive a bonus If business does well could receive a bonus

19 Employees As with managers, if the business does badly, they might lose their jobs As with managers, if the business does badly, they might lose their jobs Want to have job security Want to have job security May not be enough money to pay their wages May not be enough money to pay their wages May not receive pay increase if poor performance May not receive pay increase if poor performance

20 HM Revenue and Customs They have to make sure they collect the appropriate taxes They have to make sure they collect the appropriate taxes

21 Government Provides employment, saves paying benefits Provides employment, saves paying benefits Creates wealth in the Economy Creates wealth in the Economy

22 Suppliers Suppliers To feel secure that they have a customer to sell to To feel secure that they have a customer to sell to Want to ensure they receive payment Want to ensure they receive payment

23 Customers want to buy good quality products at a reasonable price want to buy good quality products at a reasonable price like variety of goods/choice like variety of goods/choice

24 Local Community Want to ensure work is carried out safely Want to ensure work is carried out safely Creates employment in the community leading to increased wealth Creates employment in the community leading to increased wealth

25 Pressure Groups Environmental groups want to ensure no work is causing pollution/damage to environment Environmental groups want to ensure no work is causing pollution/damage to environment Workers rights are maintained Workers rights are maintained

26 Banks/Investors Want business to be successful to ensure any loans will be repaid Want business to be successful to ensure any loans will be repaid To receive return on their investment To receive return on their investment

27 Social Costs and Benefits Social Costs Traffic congestion Traffic congestion Traffic pollution – poor air quality Traffic pollution – poor air quality Noise pollution Noise pollution Health problems Health problems These are negative effects on a community as a result of a new business. Social Benefits Improved road Improved roadnetwork New housing New housing New schools New schools These are positive effects on a community as a result of a new business

28 Economic Costs and Benefits Economic Costs Money spent on premises, roads for new business rather than other things Money spent on premises, roads for new business rather than other things Increase in council taxation, eg Increase in council taxation, eg Rates Rates Council tax Council tax Water rates Water rates These are negative money effects on a community as a result of a new business Economic Benefits More jobs – more people employed More jobs – more people employed More money available to spend in local shops More money available to spend in local shops Business growth Business growth Improved standard of living Improved standard of living These are positive money effects on a community as a result of a new business

29 What is a Stakeholder? Stakeholders are people or organisations that have an interest or ‘stake’ in the way a company is run. For Example If a new television programme was introduced and attracted 30 million viewers, who would benefit from it being a success?] Advertising Companies eg Cadbury’s The Costume Makers The Set Designers The Scriptwriters These are all examples of Stakeholders as they have an interest in the success of the programme